YELL - Debt-laden Yellow Corp files for bankruptcy after prolonged labor row

2023-08-07 05:20:02 ET

Cash-strapped Yellow Corp ( NASDAQ: YELL ) has filed for Chapter 11 bankruptcy protection , which was widely expected as the trucking company struggled to handle its outsized debt load, which forced it to miss union payments. Its shares sank 24.6% before the bell on Monday.

The company expects to enter into a debtor-in-possession financing facility, which will be used to support the businesses throughout the sale process, including payment of certain prepetition wages.

Yellow ( YELL ) had assets and liabilities of ~$1B-$10B, bankruptcy filing showed. It has more than 100K creditors, the biggest of which include BNSF Railway, Amazon ( AMZN ), Home Depot ( HD ) and Union Pacific's ( UNP ) railroad unit.

Yellow ( YELL ) had been struggling to stay afloat amid weakening shipping demand despite prior union concessions and a $700M COVID-era government bailout.

The company has been implementing a restructuring plan to modernize operations, which turned out to be the final nail in the coffin amid opposition from Teamsters Union.

The dispute led to customers abandoning Yellow ( YELL ) and shifting their cargoes to rivals. This pushed the company to shut down operations last month and lay off 30K workers.

Yellow ( YELL ) placed the blame squarely on Teamsters, saying the union drove the company out of business. "We faced nine months of union bullying and deliberately destructive tactics," said CEO Darren Hawkins.

Yellow ( YELL ) said by summer, its losses from Teamsters delaying its restructuring plan reached over $137M in adjusted EBITDA. It then sued the union for breach of contract and loss of enterprise value, saying damages have grown since.

Teamsters disagreed, saying : "Our members' loss of work at Yellow ( YELL ) was no fault of their own. In fact, they gave billions back to this dysfunctional freight company for decades."

While the company has failed, retail investors have been racking up profits in an old-fashioned meme-stock rally. Yellow ( YELL ) stock has seen an over fourfold increase in its value in the last month alone, climbing 402.8% since it shuttered operations.

More on Yellow Corp

• Yellow Corp. rallies on reports of Apollo loan
• Yellow Corp. shuts down operations
• Yellow Corp: Knives Out For Potential Bankruptcy
• Yellow Corp: MFN Stake Unleashes Meme Stock Crowd

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